Government help for first home-buyers is likely to do little in Auckland and Wellington, where experts say it is needed most.
On current trends, eligible young couples would be entitled to a subsidy for only the cheapest houses in Auckland City. However hard they save, seven out of eight houses would be ruled off-limits.
But some argue that Generation X members have simply become too big for their boots, expecting to buy in Parnell and Mt Victoria when their parents happily bought their first homes in the suburbs.
Rattled senior ministers halved the proposed subsidy for a first home deposit from $10,000 to $5000 after an April economic update showed a tightening economy with less spending cash available to future governments.
And Cabinet papers show the Government is willing to subsidise house deposits in only the lower quarter of regional house prices. In Auckland region, the subsidies would force first home-buyers out to the more remote suburbs like Papakura and Onehunga.
Quotable Value says the cut-off for Auckland region's lower quartile was $275,000 at the end of last year: there were only about 200 house sales in all of Auckland City below that mark.
In Wellington City, if trends continue, the news is even worse: 91 per cent of houses would be off-limits, forcing first home-buyers out to suburbs like Silverstream in Upper Hutt, and Porirua East.
After living in central Wellington apartments, Ben and Morag Sinclair paid $160,000 twoyears ago for their first home,in Silverstream.
"You see people all the time who buy their first homes close to the central city and end up financially crippling themselves," Mr Sinclair said.
They expect to pay their 20-year mortgage off in fewer than 10 years: "You're better off setting your sights a little lower and working your way up, rather than shooting for the moon from the word go.
"We find it really good out here: it's quiet, and we save a lot of money because we're not always tempted to go out for coffees or buy lunch."
For the past six months, the Herald on Sunday has been talking to young Aucklanders trying to buy their first homes. Couple by couple, they have given up waiting for Government help, gritted their teeth and waded into the market.
Andrew McDowall and Emma White paid $385,000 in April for a two-bedroom Sandringham duplex and believe the cut-off is likely to be too low to buy a house anywhere near central Auckland.
However, they believe it may help young couples in the provinces or those who are willingto spend an hour commuting to work every day.
"The subsidy is just chicken-feed really, but outside Auckland it might be a leg-up," Ms White said.
Despite committing themselves to 30 years of mortgage repayments, beginning at $600 a week, they don't regret buying:
"A sense of ownership is fantastic," said Mr McDowall.
"I don't think owning a share portfolio would be the same ... there's a little bit more emotion attached to a house."
- HERALD ON SUNDAY
Home help little use in big cities
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